EN BANC

[G.R. No. 97149. March 31, 1992.]

FIDENCIO Y. BEJA, SR., petitioner, vs. COURT OF APPEALS, HONORABLE

REINERIO O. REYES, in his capacity as Secretary of the Department of
Transportation and Communications; COMMODORE ROGELIO A. DAYAN, in his
capacity as General Manager of the Philippine Ports Authority; DEPARTMENT OF
TRANSPORTATION AND COMMUNICATIONS, ADMINISTRATIVE ACTION BOARD;
and JUSTICE ONOFRE A. VILLALUZ, in his capacity as Chairman of the
Administrative Action Board, DOTC, respondents.

DECISION

ROMERO, J p:

The instant-petition for certiorari questions the jurisdiction of the Secretary of the
Department of Transportation and Communications (DOTC) and/or its Administrative
Action Board (AAB) over administrative cases involving personnel below the rank of
Assistant General Manager of the Philippine Ports Authority (PPA), an agency attached
to the said Department.

Petitioner Fidencio Y. Beja, Sr. 1 was first employed by the PPA as arrastre supervisor
in 1975. He became Assistant Port Operations Officer in 1976 and Port Operations
Officer in 1977. In February 1988, as a result of the reorganization of the PPA, he was
appointed Terminal Supervisor. cdphil

On October 21, 1988, the PPA General Manager, Rogelio A. Dayan, filed Administrative
Case No. 11-04-88 against petitioner Beja and Hernando G. Villaluz for grave
dishonesty, grave misconduct, willful violation of reasonable office rules and
regulations and conduct prejudicial to the best interest of the service. Beja and
Villaluz allegedly erroneously assessed storage fees resulting in the loss of P38,150.77
on the part of the PPA. Consequently, they were preventively suspended for the
charges. After a preliminary investigation conducted by the district attorney for Region
X, Administrative Case No. 11-04-88 was "considered closed for lack of merit."

On December 13, 1988, another charge sheet, docketed as Administrative Case No.
12-01-88, was filed against Beja by the PPA general manager also for dishonesty,
grave misconduct, violation of reasonable office rules and regulations, conduct
prejudicial to the best interest of the service and for being notoriously undesirable.
The charge consisted of six (6) different specifications of administrative offenses
including fraud against the PPA in the total amount of P218,000.00.Beja was also
placed under preventive suspension pursuant to Sec. 41 of P.D. No. 807.

The case was redocketed as Administrative Case No. PPA-AAB-1-049-89 and

thereafter, the PPA general manager indorsed it to the AAB for "appropriate action." At
the scheduled hearing, Beja asked for continuance on the ground that he needed time
to study the charges against him. The AAB proceeded to hear the case and
gave Beja an opportunity to present evidence. However, on February 20,
1989, Beja filed a petition for certiorari with preliminary injunction before the Regional
Trial Court of Misamis Oriental. 2 Two days later, he filed with the AAB a
manifestation and motion to suspend the hearing of Administrative Case No. PPA-
AAB-1-049-89 on account of the pendency of the certiorari proceeding before the
court. AAB denied the motion and continued with the hearing of the administrative
case.

Thereafter, Beja moved for the dismissal of the certiorari case below and proceeded to
file before this Court a petition for certiorari with preliminary injunction and/or
temporary restraining order. The case was docketed as G.R. No. 87352 captioned
"Fidencio Y. Beja v. Hon. Reinerio O. Reyes, etc., al." In the en banc resolution of
March 30, 1989, this Court referred the case to the Court of Appeals for "appropriate
action." 3 G.R. No. 87352 was redocketed in the Court of Appeals as CA-G.R. SP No.
17270.

Meanwhile, a decision was rendered by the AAB in Administrative Case No. PPA-AAB-
049-89. Its dispositive portion reads:

"WHEREFORE, judgment is hereby rendered, adjudging the following, namely:

a)That respondents Geronimo Beja, Jr. and Hernando Villaluz are exonerated from the
charge against them;

b)That respondent Fidencio Y. Beja be dismissed from the service;

c)That his leave credits and retirement benefits are declared forfeited;

d)That he be disqualified from re-employment in the government service;

e)That his eligibility is recommended to be cancelled.

Pasig, Metro Manila, February 28, 1989."

On December 10, 1990, after appropriate proceedings, the Court of Appeals also
rendered a decision 4 in CA-G.R. SP No. 17270 dismissing the petition for certiorari
for lack of merit. Hence, Beja elevated the case back to this Court through an "appeal
by certiorari with preliminary injunction and/or temporary restraining order."

We find the pleadings filed in this case to be sufficient bases for arriving at a decision
and hence, the filing of memoranda has been dispensed with.

In his petition, Beja assails the Court of Appeals for having "decided questions of
substance in a way probably not in accord with law or with the applicable decisions" of
this Court. 5 Specifically, Beja contends that the Court, of Appealsfailed to declare
that: (a) he was denied due process; (b) the PPA general manager has no power to
issue a preventive suspension order without the necessary approval of the PPA board
of directors; (c) the PPA general manager has no power to refer the administrative case
filed against him to the DOTC-AAB, and (d) the DOTC Secretary, the Chairman of the
DOTC-AAB and DOTC-AAB itself as an adjudicatory body, have no jurisdiction to try
the administrative case against him. Simply put, Beja challenges the legality of the
preventive suspension and the jurisdiction of the DOTC Secretary and/or the AAB to
initiate and hear administrative cases against PPA personnel below the rank of
Assistant General Manager. cdphil

Petitioner anchors his contention that the PPA general manager cannot subject him to
a preventive suspension on the following provision of Sec. 8, Art. V of Presidential
Decree No. 857 reorganizing the PPA:

"(d)The General Manager shall, subject to the approval of the Board, appoint and
remove personnel below the rank of Assistant General Manager." (Emphasis supplied.)

Petitioner contends that under this provision, the PPA Board of Directors and not the
PPA General Manager is the "proper disciplining authority." 6

As correctly observed by the Solicitor General, the petitioner erroneously equates

"preventive suspension" as a remedial measure with "suspension" as a penalty for
administrative dereliction. The imposition of preventive suspension on a government
employee charged with an administrative offense is subject to the following provision
of the Civil Service Law, P.D. No. 807:

"Sec. 41.Preventive Suspension. The proper disciplining authority may preventively

suspend any subordinate officer or employee under his authority pending an
investigation, if the charge against such officer or employee involves dishonesty,
oppression or grave misconduct, or neglect in the performance of duty, or if there are
reasons to believe that the respondent is guilty of charges which would warrant his
removal from the service."

Imposed during the tendency of an administrative investigation, preventive suspension

is not a penalty in itself. It is merely a measure of precaution so that the employee who
is charged may be separated, for obvious reasons, from the scene of his alleged
misfeasance while the same is being investigated. 7 Thus, preventive suspension is
distinct from the administrative penalty of removal from office such as the one
mentioned in Sec. 8(d) of P.D. No. 857. While the former may be imposed on a
respondent during the investigation of the charges against him, the latter is the
penalty which may only be meted upon him at the termination of the investigation or
the final disposition of the case. cdphil

The PPA general manager is the disciplining authority who may, by himself and
without the approval of the PPA Board of Directors, subject a respondent in an
administrative case to preventive suspension. His disciplinary powers are sanctioned,
not only by Sec. 8 of P.D. No. 857 aforequoted, but also by Sec. 37 of P.D. No. 807
granting heads of agencies the "jurisdiction to investigate and decide matters involving
disciplinary actions against officers and employees" in the PPA. Cdpr

Parenthetically, the period of preventive suspension is limited. It may be lifted even if

the disciplining authority has not finally decided the administrative case provided the
ninety-day period from the effectivity of the preventive suspension has been
exhausted. The employee concerned may then be reinstated. 8 However, the said
ninety-day period may be interrupted. Section 42 of P.D. No. 807 also mandates that
any fault, negligence or petition of a suspended employee may not be considered in the
computation of the said period. Thus, when a suspended employee obtains from a
court of justice a restraining order or a preliminary injunction inhibiting proceedings
in an administrative case, the lifespan of such court order should be excluded in the
reckoning of the permissible period of the preventive suspension. 9

With respect to the issue of whether or not the DOTC Secretary and/or the AAB may
initiate and hear administrative cases against PPA personnel below the rank of
Assistant General Manager, the Court qualifiedly rules in favor of petitioner.

The PPA was created through P.D. No. 505 dated July 11, 1974. Under that law, the
corporate powers of the PPA were vested in a governing Board of Directors known as
the Philippine Port Authority Council. Sec. 5(i) of the same decree gave the Council the
power "to appoint, discipline and remove, and determine the composition of the
technical staff of the Authority and other personnel."

On December 23, 1975, P.D. No. 505 was substituted by P.D. No. 857. Sec. 4(a)
thereof created the Philippine Ports Authority which would be "attached" to the then
Department of Public Works, Transportation and Communication. When Executive
Order No. 125 dated January 30, 1987 reorganizing the Ministry of Transportation
and Communications was issued, the PPA retained its "attached" status. 10 Even
Executive Order No. 292 or the Administrative Code of 1987 classified the PPA as an
agency "attached" to the Department of Transportation and Communications (DOTC).
Sec. 24 of Book IV, Title XV, Chapter 6 of the same Code provides that the agencies
attached to the DOTC "shall continue to operate and function in accordance with the
respective charters or laws creating them, except when they conflict with this Code.

Attachment of an agency to a Department is one of the three administrative

relationships mentioned in Book IV, Chapter 7 of the Administrative Code of 1987, the
other two being supervision and control and administrative supervision. "Attachment"
is defined in Sec. 38 thereof as follows:

"(3)Attachment. (a) This refers to the lateral relationship between the department or
its equivalent and the attached agency or coordination. The coordination shall be
accomplished by having the department represented in the governing board of the
attached agency or corporation, either as chairman or as a member, with or without
voting rights, if this is permitted by the charter; having the attached corporation or
agency comply with a system of periodic reporting which shall reflect the progress of
programs and projects; and having the department or its equivalent provide general
policies through its representative in the board, which shall serve as the framework for
the internal policies of the attached corporation or agency;

(b)Matters of day-to-day administration or all those pertaining to internal operations

shall be left to the discretion or judgment of the executive officer of the agency or
corporation. In the event that the Secretary and the head of the board or the attached
agency or corporation strongly disagree on the interpretation and application of
policies, and the Secretary is unable to resolve the disagreement, he shall bring the
matter to the President for resolution and direction;

(c)Government-owned or controlled corporations attached to a department shall

submit to the Secretary concerned their audited financial statements within sixty (60)
days after the close of the fiscal year; and

(d)Pending submission of the required financial statements, the corporation shall

continue to operate on the basis of the preceding year's budget until the financial
statements shall have been submitted. Should any government-owned or controlled
corporation incur an operation deficit at the close of its fiscal year, it shall be subject
to administrative supervision of the department; and the corporation's operating and
capital budget shall be subject to the department's examination, review, modification
and approval." (Emphasis supplied.)

An attached agency has a larger measure of independence from the Department to

which it is attached than one which is under departmental supervision and control or
administrative supervision. This is borne out by the "lateral relationship" between the
Department and the attached agency. The attachment is merely for "policy and
program coordination." With respect to administrative matters, the independence of an
attached agency from Departmental control and supervision is further reinforced by
the fact that even an agency under a Department's administrative supervision is free
from Departmental interference with respect to appointments and other personnel
actions "in accordance with the decentralization of personnel functions" under the
Administrative Code of 1987. 11 Moreover, the Administrative Code explicitly provides
that Chapter 8 of Book IV on supervision and control shall not apply to chartered
institutions attached to a Department. 1 2

Hence, the inescapable conclusion is that with respect to the management of

personnel, an attached agency is, to a certain extent, free from Departmental
interference and control. This is more explicitly shown by P.D. No. 857 which provides:
"SEC. 8.Management and Staff . a) The President shall, upon the recommendation
of the Board, appoint the General Manager and the Assistant General Managers.

b)All other officials and employees of the Authority shall be selected and appointed on
the basis of merit and fitness based on a comprehensive and progressive merit system
to be established by the Authority immediately upon its organization and consistent
with Civil Service rules and regulations. The recruitment, transfer, promotion, and
dismissal of all personnel of the Authority, including temporary workers, shall be
governed by such merit system.

c)The General Manager shall, subject to the approval of the Board, determine the
staffing pattern and the number of personnel of the Authority, define their duties and
responsibilities, and fix their salaries and emoluments. For professional and technical
positions, the General Manager shall recommend salaries and emoluments that are
comparable to those of similar positions in other government-owned corporations, the
provisions of existing rules and regulations on wage and position classification
notwithstanding.

d)The General Manager shall, subject to the approval by the Board, appoint and
remove personnel below the rank of Assistant General Manager.

xxx xxx xxx" (Emphasis supplied.)

Although the foregoing section does not expressly provide for a mechanism for an
administrative investigation of personnel, by vesting the power to remove erring
employees on the General Manager, with the approval of the PPA Board of Directors,
the law impliedly grants said officials the power to investigate its personnel below the
rank of Assistant Manager who may be charged with an administrative offense. During
such investigation, the PPA General Manager, as earlier stated, may subject the
employee concerned to preventive suspension. The investigation should be conducted
in accordance with the procedure set out in Sec. 38 of P.D. No. 807. 13 Only after
gathering sufficient facts may the PPA General Manager impose the proper penalty in
accordance with law. It is the latter action which requires the approval of the PPA
Board of Directors. 14

From an adverse decision of the PPA General Manager and the Board of Directors, the
employee concerned may elevate the matter to the Department Head or Secretary.
Otherwise, he may appeal directly to the Civil Service Commission. The permissive
recourse to the Department Secretary is sanctioned by the Civil Service Law (P.D. No.
807) under the following provisions:

"SEC. 37.Disciplinary Jurisdiction. (a) The Commission shall decide upon appeal all
administrative disciplinary cases involving the imposition of a penalty of suspension
for more than thirty days, or fine in an amount exceeding thirty days' salary, demotion
in rank or salary or transfer, removal or dismissal from office. A complaint may be
filed directly with the Commission by a private citizen against a government official or
employee in which case it may hear and decide the case or it may deputize any
department or agency or official or group of officials to conduct the investigation. The
results of the investigation shall be submitted to the Commission with
recommendation as to the penalty to be imposed or other action to be taken."

(b)The heads of departments, agencies and instrumentalities, provinces, cities and

municipalities shall have jurisdiction to investigate and decide matters involving
disciplinary action against officers and employees under their jurisdiction. The
decisions shall be final in case the penalty imposed is suspension for not more than
thirty days or fine in an amount not exceeding thirty days' salary. In case the decision
rendered by a bureau or office head is appealable to the Commission, the same may be
initially appealed to the department and finally to the Commission and pending appeal,
the same shall be executory except when the penalty is removal, in which case the
same shall be executory only after confirmation by the department head.

"xxx xxx xxx" (Emphasis supplied.)

It is, therefore, clear that the transmittal of the complaint by the PPA General Manager
to the AAB was premature. The PPA General Manager should have first conducted an
investigation, made the proper recommendation for the imposable penalty and sought
its approval by the PPA Board of Directors. It was discretionary on the part of the
herein petitioner to elevate the case to the then DOTC Secretary Reyes. Only then
could the AAB take jurisdiction of the case.

The AAB, which was created during the tenure of Secretary Reyes under Office Order
No. 88-318 dated July 1, 1988, was designed to act, decide and recommend to him "all
cases of administrative malfeasance, irregularities, grafts and acts of corruption in the
Department." Composed of a Chairman and two (2) members, the AAB came into being
pursuant to Administrative Order No. 25 issued by the President on May 25,
1987. 15 Its special nature as a quasi-judicial administrative body notwithstanding,
the AAB is not exempt from the observance of due process in its proceedings. 16 We
are not satisfied that it did so in this case the respondents protestation that petitioner
waived his right to be heard notwithstanding. It should be observed that petitioner
was precisely questioning the AAB's jurisdiction when it sought judicial
recourse. cdasia

WHEREFORE, the decision of the Court of Appeals is AFFIRMED insofar as it upholds

the power of the PPA General Manager to subject petitioner to preventive suspension
and REVERSED insofar as it validates the jurisdiction of the DOTC and/or the AAB to
act on Administrative Case No. PPA-AAB-1-049-89 and rules that due process has
been accorded the petitioner.

The AAB decision in said case is hereby declared NULL and VOID and the case is
REMANDED to the PPA whose General Manager shall conduct with dispatch its
reinvestigation.
The preventive suspension of petitioner shall continue unless after a determination of
its duration, it is found that he had served the total of ninety (90) days in which case
he shall be reinstated immediately.

SO ORDERED.